SMM Evening Comments (Jun 30): Shanghai nonferrous metals rose for the most part, aluminium dropped 0.29%

SHANGHAI, Jun 30 (SMM) – Shanghai nonferrous metals, except aluminium, closed higher today, as China’s manufacturing industry PMI was higher than expected, and US Fed is likely to reduce QE in advance.

Lead led the gain by 4.29%, copper rose 0.19%, zinc edged up 0.66%, nickel increased 1.48, and tin went up 1.85, while aluminium dropped 0.29%.

The ferrous complex were mixed. Iron ore dropped 0.72%, while rebar increased 0.86%, and hot-rolled coil rose 1.12%.

Copper: The most traded SHFE 2108 copper contract ended 0.19% higher at 68,390 yuan/mt today, with open interest down 1,233 lots to 121,002 lots.

Aluminium: The most liquid SHFE 2108 aluminium contract dipped 0.29% to close at 18,800 yuan/mt today, with open interest down 5,078 lots to 212,234 lots.

Lead: The most traded SHFE 2108 lead contract gained 4.29% to close at 16,050 yuan/mt today, with open interest up 5,346 lots to 73,455 lots.

The supply of lead concentrate and lead-acid battery scrap remained tight, and TCs continued to drop in July. Cost support of lead prices kept rising. Sport market was dominated by the wait-and-see mood amid sluggish trade, as downstream users were reluctant to purchase at high prices. Traders were more willing to deliver goods, and the social inventories of lead ingots are likely to rise. However, the stock increase may be limited by more export opportunities amid overseas strong consumption and high LME lead prices. Operating rates of secondary lead rebounded slightly due to the recovered profits this week. The lead supply side is still flexible, and whether the stocks will decline in the peak season remains to be seen. The market is in a game between the peak season of consumption and the high inventories, and lead prices are expected to remain volatile at high levels. The short-term surge may be limited by the pressure line.

Zinc: The most liquid SHFE 2108 zinc contract ended 0.66% higher at 21,965 yuan/mt today, with open interest down 8,067 lots to 94,053 lots.

China's manufacturing industry PMI in June was higher than expected, indicating that the manufacturing industry was expanding. US Fed officer Waller stated that they can reduce the quantitative easing in advance.

At fundamentals, the galvanising companies in Hebei, Tianjin, and other northern regions have been required to stop production to ensure the good air quality in Beijing. Around 129,000 mt of output is likely to be reduced. In addition, some northern regions have prohibited the vehicle transportation, which will affect the good arrivals, but the ban will not last for long, and zinc prices will not be impacted. Zinc prices will remain volatile in the short term.

Nickel: The most traded SHFE 2108 nickel contract increased 1.48% to end at 138,060 yuan/mt today, with open interest up 7,386 lots to 139,793 lots.

Tin: The most active SHFE 2108 tin contract closed 1.85% higher at 214,620 yuan/mt today, with open interest up 1,830 lots to 41,620 lots. The overall market trade recovered. Upstream companies’ willingness to ship goods was flat with rising tin prices, and downstream users purchased on rigid demand.